Staff's Recommended Board Motion:

In accordance with Board-approved resolution R17-059, approve the following Solicitation parameters,

which will be employed in the first Transportation Impact Fee Offset Buy-Back Program's Competitive

Solicitation, which will be noticed in June:

1)Establish a Maximum Offer Price of 80% of the book value of an Offset

2)Confirmation of $10 million in available funds

3)All Impact Fee Zones are eligible to participate

4)The minimum offset eligible to be offered per bid is $1,000

There is no financial impact associated with approval of this item. This item is included in the FY 17

Adopted Budget.

Financial Impact Statement:

There is no financial impact associated with approval of this item. This item is included in the FY 17

Adopted Budget.

Background:

On May 17, 2017, the Board adopted resolution R17-059, which approved the County's plan to buy

Agenda Item Cover Sheet Agenda Item No.

Meeting Date

Consent Section Regular Section Public Hearing

Subject:

Department Name:

Contact Person:

Contact Phone:

Sign-Off Approvals:

Assistant County Administrator Date Department Director Date

Management and Budget – Approved as to Financial Impact Accuracy Date

County Attorney – Approved as to Legal Sufficiency Date

A-22

June 07, 2017

x

Approve the Solicitation Parameters for the Transportation Impact Fee Offset Buy-Back Program'sCompetitive Modified Reserve Solicitations ("Competitive Solicitations").

Management and Budget

Tom Fesler 276-8282

06/01/2017

06/04/201706/01/2017

back transportation impact fee offsets ("Offsets"), using the four parameters noted above as the guiding

methodology. The first Competitive Solicitation will be noticed in June. As part of the preparation

process for this and future Solicitations, the County engaged Public Resources Advisory Group

("PRAG"), acting as its financial advisor, to assist in development of appropriate minimum and

maximum values to be used in the Solicitations; their complete analysis is included as an attachment to

this agenda item.

As part of their analysis, PRAG analyzed current development trends and used those results to estimate

the economic outcome to the County at different Maximum Offer Prices. Based on PRAG's analysis,

Staff is recommending a Maximum Offer Price equal to 80% of the Offset amount in order to achieve

an economic benefit. It is anticipated that this rate is at a level sufficient for the County to achieve the

desired program objectives of encouraging and attracting participation in the Solicitation while driving

optimal financial results for the County, and reducing the burden to the taxpayer by buying offsets at a

reduced price.

List Attachments:

Resolution R17-059, Offset Valuation

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Offset ValuationHillsborough County, FL

Summary:Without the solicitation process, the Offsets will be used by Owners in the future to offset future development over some time period ("Expected Usage").Instead of purchasing Offsets now through the solicitiation, the County could accept the Offsets in the future with a value of 100%.If the County did not purchase Offsets now, the funds budgeted for the purchase of Offsets now in the solicitiation could theoretically be invested by the County to earn a return until the Offsets are used.As a proxy for future investment rates, we used Treasury rates corresponding to each year and used these rates to calculate the discount rate for each year during with the Offsets would otherwise be used.However, if an Owner is planning to use Offsets for an upcoming project, it would be expected that they would use the Offsets at 100% in the project and not participate in the solicititation.Therefore, we assumed that there is a time period during the first few years during which the corresponding Offsets would not be available for participation in the solitication. 

For this analysis, we assumed that the Offsets would be used over a 10 year term and that if an Offset would be expected to be used within the first 2 years, it would not participate in the solicitation.Therefore, with $100 million of Offsets in total, $80 million of Offsets would consider participating in the solicitation, representing the Offsets that would otherwise be expected to be used in years 3 through 10.With a Treasury rate of 1.6% for 3 years, the County would breakeven by paying $9.5 million for the $10 million in Offsets that would otherwise be expected to be used in Year 3.The total discounted value of the $80 million in Offsets is $69.8 million, representing a breakeven to the County of 87%.The chart below the results indicates the breakeven point  for a variety of expected usage terms of the Offsets and years until the Owners are assumed to be interested in participating in the solicitiation.

Assumptions:Total Value of Offsets: 100,000,000 Assumed total face value of Offsets (for calculations only will not change Maximum Price results)Period over which Offsets are expected to be used 10 Term over which Offsets would assume to be used if there were no solicitionFirst year Owners are will be willing to sell Offsets  3 If the Offsets are expected to be used within a few years they are unlikely to be placed in the solicitiation.

Results:Year 1 2 3 4 5 6 7 8 9 10 TotalPercent of Offsets Assumed to be Used  10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 100.0%Value of Offsets Owners will be willing to sell 0 0 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 80,000,000Treasury Constant Maturities (non‐bold face are interpolated) 1.1% 1.4% 1.6% 1.7250% 1.9% 2.0500% 2.2% 2.2633% 2.3267% 2.4%Present Value Factor 0.98883 0.97354 0.95491 0.93388 0.91018 0.88536 0.85870 0.83607 0.81302 0.78963Offset PV 0 0 9,549,051 9,338,760 9,101,838 8,853,642 8,587,045 8,360,658 8,130,187 7,896,317 69,817,497

County Breakeven (Calculated) 87.27%County Breakeven (Rounded) 87%

80%82%84%86%88%90%92%94%96%

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Years until Expected Usage of an Offset that an Owner will begin participating in the Solicitiation

Resulting Breakeven

5 Year Expected Usage

6 Year Expected Usage

7 Year Expected Usage

8 Year Expected Usage

9 Year Expected Usage

10 Year Expected Usage

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